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Vonage Holdings Corp (NYSE:VG)
Beneish M-Score
-3.24 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Vonage Holdings Corp has a M-score of -3.24 suggests that the company is not a manipulator.

VG' s 10-Year Beneish M-Score Range
Min: -5.31   Max: 1.38
Current: -3.24

-5.31
1.38

During the past 13 years, the highest Beneish M-Score of Vonage Holdings Corp was 1.38. The lowest was -5.31. And the median was -2.94.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Vonage Holdings Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 0.7276+0.528 * 0.9771+0.404 * 1.2325+0.892 * 0.9981+0.115 * 0.7905
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.126+4.679 * -0.1139-0.327 * 1.0471
=-3.24

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Mar14) TTM:Last Year (Mar13) TTM:
Accounts Receivable was $19.6 Mil.
Revenue was 220.733 + 211.22 + 203.984 + 204.776 = $840.7 Mil.
Gross Profit was 158.377 + 149.142 + 141.567 + 142.032 = $591.1 Mil.
Total Current Assets was $122.1 Mil.
Total Assets was $596.7 Mil.
Property, Plant and Equipment(Net PPE) was $47.9 Mil.
Depreciation, Depletion and Amortization(DDA) was $40.4 Mil.
Selling, General & Admin. Expense(SGA) was $510.5 Mil.
Total Current Liabilities was $174.1 Mil.
Long-Term Debt was $81.9 Mil.
Net Income was 4.588 + 3.588 + 4.207 + 7.447 = $19.8 Mil.
Non Operating Income was -0.013 + -0.033 + -0.015 + -0.017 = $-0.1 Mil.
Cash Flow from Operations was 9.387 + 36.089 + 23.55 + 18.852 = $87.9 Mil.
Accounts Receivable was $27.0 Mil.
Revenue was 209.087 + 213.711 + 207.584 + 211.916 = $842.3 Mil.
Gross Profit was 145.028 + 147.329 + 141.895 + 144.446 = $578.7 Mil.
Total Current Assets was $172.7 Mil.
Total Assets was $548.5 Mil.
Property, Plant and Equipment(Net PPE) was $57.6 Mil.
Depreciation, Depletion and Amortization(DDA) was $32.7 Mil.
Selling, General & Admin. Expense(SGA) was $454.2 Mil.
Total Current Liabilities was $171.5 Mil.
Long-Term Debt was $53.2 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(19.626 / 840.713) / (27.025 / 842.298)
=0.02334447 / 0.03208484
=0.7276

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(149.142 / 842.298) / (158.377 / 840.713)
=0.68704663 / 0.70311509
=0.9771

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (122.075 + 47.921) / 596.701) / (1 - (172.671 + 57.615) / 548.549)
=0.7151069 / 0.58019065
=1.2325

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=840.713 / 842.298
=0.9981

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(32.655 / (32.655 + 57.615)) / (40.429 / (40.429 + 47.921))
=0.36174809 / 0.45760045
=0.7905

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(510.492 / 840.713) / (454.23 / 842.298)
=0.60721316 / 0.5392747
=1.126

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((81.906 + 174.117) / 596.701) / ((53.241 + 171.532) / 548.549)
=0.42906414 / 0.4097592
=1.0471

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(19.83 - -0.078 - 87.878) / 596.701
=-0.1139

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Vonage Holdings Corp has a M-score of -3.24 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Vonage Holdings Corp Annual Data

Dec04Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13
DSRI 0.72681.10840.89120.80990.86121.01481.62460.86140.9857
GMI 0.8781.0160.84320.950.97221.02740.97150.99980.977
AQI 2.53730.83673.2811.49660.98070.61972.9950.90571.1338
SGI 3.37732.25631.36361.08680.98770.99550.98340.97560.9764
DEPI 2.0840.59820.64170.76760.8650.95231.13870.99360.8694
SGAI 1.11990.71040.8570.68150.90440.891.02121.06211.1017
LVGI 2.6250.7811.43771.12751.06821.19730.31630.87971.1523
TATA -0.1593-0.19730.0081-0.1108-0.1018-0.56640.4862-0.152-0.0931
M-score -1.23-2.17-1.54-2.94-3.14-5.311.38-3.35-2.99

Vonage Holdings Corp Quarterly Data

Dec11Mar12Jun12Sep12Dec12Mar13Jun13Sep13Dec13Mar14
DSRI 1.62461.06061.0981.29170.86141.66611.73831.36570.98570.7276
GMI 0.97150.98260.99741.00230.99980.98830.9810.97970.9770.9771
AQI 2.9953.11732.72442.45230.90570.87320.91910.96831.13381.2325
SGI 0.98340.9880.98870.97570.97560.97220.97110.9770.97640.9981
DEPI 1.13871.15331.06170.98560.99360.96510.99460.8220.86940.7905
SGAI 1.02121.03981.04381.05321.06211.04611.05591.07741.10171.126
LVGI 0.31630.30820.31880.31610.87970.95870.98631.04081.15231.0471
TATA 0.48620.48710.47530.5149-0.152-0.1506-0.1119-0.1413-0.0931-0.1139
M-score 1.380.930.740.98-3.35-2.65-2.40-2.90-2.99-3.24
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